Firm Proposes Money-Back Guarantee for Cancer Drugs
Under a proposed arrangement between the Johnson & Johnson unit Janssen-Cilag and Britain's national health service, the government agency would pay for the company's cancer drug Velcade "only for people who benefit from the medicine," the New York Times reports.
Initially, an advisory board decided that Velcade -- approved to treat relapses of multiple myeloma, a bone marrow cancer -- was not cost effective and that it should not be covered by the national health service. Patient groups and the company won an appeal of the decision and the government agency was forced to reconsider coverage of the treatment. J&J then proposed the program as a way to have the treatment designated as cost effective.
Under the proposal, all patients would be eligible for four cycles of treatment, which cost about $24,000. If the tumors appear to shrink, as determined by a blood test, treatment would continue and the health service would cover the cost. If tumors do not shrink, treatment with Velcade would stop and the company would reimburse the government for money spent on the drug.
However, the company and government disagree on how much the tumors must shrink for the drug to be considered beneficial. GlaxoSmithKline says it has reached similar agreements with two European nations, although the company would not disclose which countries or drugs were involved.
According to the Times, such proposals "may signal the pharmaceutical industry's willingness to edge toward a new pay-for-performance paradigm -- in which a drug's price would be based on how well it worked and might be adjusted up or down as new evidence came in." However, "[i]t is far too soon to tell whether such a pricing paradigm can actually work, in particular because it can be difficult in many cases to measure how well a drug is working," and the "approach would probably be most feasible in countries, like Britain, where the government is the primary payer," the Times reports.
Lee Newcomer, senior vice president for oncology at United Healthcare, said such "risk-sharing" deals would be difficult to reach in the U.S. because there is "no way we could ask for it and have any leverage." He added that state regulations and marketplace pressures make it very difficult for a U.S. insurer to deny coverage for a drug approved by FDA, regardless of cost.
However, United Healthcare is trying a risk-sharing experiment with Genomic Health, involving a test that helps determine whether a woman with early stage breast cancer would benefit from chemotherapy.
Under the agreement, the insurer will pay for the test for 18 months, while Genomic monitors how many women still receive chemotherapy after the test suggests they do not need such treatment, according to Newcomer. Genomic will lower the price of the test if it does not have the intended impact on actual medical practice, according to the Times.
Newcomer said, "The point is to try to make the manufacturer responsible for how their product is used in the medical marketplace."
Meanwhile, Sean Tunis, a former chief medical officer of CMS and director of the not-for-profit Center for Medical Technology Policy, said he was asked by a U.S. biotechnology company for his opinion on whether to offer a money-back plan on a new cancer drug. "I and others suggested a money-back guarantee on a cancer drug looked silly," he said, adding, "'Oh, I'm sorry your grandma died. Here's your money back'" (Pollack, New York Times, 7/14).